At the time this article was published
Jack Kempf was a member of the British Columbia Legislative Assembly. He was
Chairman o the Standing Committee on Crown Corporations in 1979.

The Committee on Crown Corporations was
established by a statute of the British Columbia Legislature in 1977. This article
describes the innovative approach, possibly unique in the parliamentary system,
which this Committee brings to the direction, control and accountability of
Crown-owned companies in British Columbia.

Crown corporations fulfil a special role in
British Columbia in administering and providing many essential services to the
public. As public policy has developed, government has expanded the number,
size and complexity of Crown-owned companies, thereby increasing their impact
on residents and the economy. These companies affect all British Columbians, by
providing services to government; electric power; natural gas; ferry, rail and
transit services; auto and general insurance; and real property and business
development.

The pervasiveness of Crown corporations
requires that they be fully accountable to government and the public. As
instruments of public policy, Crown corporations must respond to the priorities
of the executive branch, often being required to undertake uneconomic
activities without compensation while maintaining a businesslike appearance. To
the extent that actions of Crown companies draw on the financial resources of
the province, the Legislative Assembly must be informed of and approve the
commitment and expenditure of public funds. Finally, disclosure to the
Legislature and public through annual reports and reviews by legislative
committees enables periodic assessments of Crown corporation performance to be
made.

In British Columbia, there was an increasing
awareness that, as Crown corporations have grown, the established control
mechanisms have become less effective in achieving a satisfactory level of
accountability. In speaking of the effectiveness of these mechanisms the
Premier stated in the House that: They (Crown corporations) have grown beyond
the ability of the government within the present restrictions and present
committee system to make them accountable to this chamber or accountable to the
people of the province.1

The dissatisfaction with the traditional control
mechanisms the designation of responsible ministers to act as links between the
Executive Council, the corporation and the Legislature, and the periodic
reviews by legislative committees led to the introduction of Bill 52, the Crown
Corporation Reporting Act and its companion motion on the Order Paper. In speak
I rig for the bill the Premier stated: "This committee – this Crown
corporations reporting committee – would have much greater powers and
opportunities to deal with these Crown corporations. They could deal with them
not in a political way or in the political atmosphere that sometimes gets in
the way of an earnest and honest effort of all members of this House ... to try
to get to the root of what's happening in our Crown corporations. "2

In addressing, its inaugural meeting, the
first chairman of the Committee, Elwood Veitch, outlined what would be expected
of Crown corporation management and committee members.

Management of these organizations (Crown
corporations) have a special responsibility to the citizens not only through
providing a high degree of service but also, in the final analysis, to be
accountable to those who are their ultimate employers and in most cases pay the
final bills when the operations run up deficits.

...this Committee provides a unique
opportunity to us as M.L.A.'s ... to be of increased service to our
constituents if our examinations are conducted in a positive and constructive
vein and, if held in a non adversary climate, this process should be beneficial
to the corporation, to the Crown and, above all, to the public.

The Legislation

There are several distinguishing features of
the Committee on Crown Corporations which make it unique in the Commonwealth.
First, it is to our knowledge the only select standing committee which has its
own statutory authority. This statute and its companion Standing Order create
and govern the committee as follows: the Committee is a Select Standing
Committee of the House, appointed from government and opposition benches at the
first sitting of each Parliament and continuing until dissolution. The
Committee may not, without leave, be comprised of more than 14 members of the
House. The Committee elects its own chairman and secretary from its membership.
The Committee may make rules governing its procedures and may sit as a whole or
in subcommittees. The costs and expenses of the Committee are guaranteed by
statutory appropriation. The provisions of the Act also clearly separate the
executive and legislative branches of government by barring any member of the
Executive Council from Committee membership.

The Committee is also unique in its ability
to employ a permanent staff and to do so without regard to the Public Service
Act. Since its inception, the Committee has maintained a staff of professionals
with diversified experience gained outside of government. The existence of this
staff, sensitive to the problems associated with operating business
enterprises, has ensured that the Committee members receive competent and non
partisan support and advice and, in addition, that Crown corporations are
subjected to a review which considers both their public policy and business
interests.

The Crown Corporation Reporting Act requires
that the Committee on instruction from the House, or on its own initiative and
in any case not less often than every three years,"... generally inquire
into and examine the management, administration and operation of each
(scheduled) corporation." Broad terms of reference are given for these
periodic reviews. In exercising its powers the Committee shall, at all times,
give primary consideration to (a) the public interest in respect of the
corporation, (b) the interest of the Crown as shareholder or principal of the
corporation, and (c) the responsibility of the Crown in respect of the
corporation.

Beyond this general instruction, the
Committee is free to define the limits of its work. Unlike many standing
legislative committees, it is not restricted to reviews of past performance but
may undertake a broad range of inquiry including examinations of corporate
organization and policy, and of present and future financial and operating
plans. The Committee may exercise the same powers as the Legislative Assembly in
compelling the attendance of witnesses and presentation of information. The
chair has the same powers as the Speaker of the House. Committee members are
granted all the powers, privileges and protection of a select standing
committee of the House.

The jurisdiction of the Committee extends
over four of the largest provincial Crown corporations. The corporations named
in the Act include: B.C. Hydro and Power Authority, B.C. Railway, B.C. Ferry
Corporation and the Insurance Corporation of B.C.. The Committee has
recommended to the Legislature that its schedule be expanded to include B.C.
Development Corporation, B.C. Systems Corporation and B.C. Buildings
Corporation. Inclusion of these corporations would give the Committee
jurisdiction over all major provincial Crown corporations.

Organization of the Committee

The Committee on Crown Corporations is
presided over by its chairman and a management subcommittee who guide the
activities of the Committee and deal with administrative matters. Recently,
four subcommittees were created each with primary responsibility for one of the
scheduled Crown corporations. This step was taken to improve the effectiveness
of the Committee by allowing individual members to gain more in-depth knowledge
of a corporation in which they have a special interest without restricting
their general view of the others. It is also seen as a means of facilitating
the ongoing monitoring of the corporations without the necessity for meetings
of the whole Committee.

The day-to-day activities of the Committee
occur primarily at the staff level. Under the guidance of a Director, the
professional analysts maintain contact with corporation managements, reviewing
their operations, planning processes and financial and management reports. In
addition, the staff is available at the request of the Committee or any
individual member to appraise any general or specific matter of interest.

The Committee normally meets once a month
unless the business of the House prevents it. At these meetings, the members
are briefed by staff on the activities of the Crown corporations and
discussions are held with respect to the more specific investigations to be
undertaken.

In those cases where a specific
investigation is undertaken, the Committee usually directs the staff to prepare
the necessary background information in the form of a briefing paper which is
discussed along with other points of interest at a closed meeting. The
Committee then meets with corporation directors and management and other
interested parties at a series of public meetings, though in cases where the
Committee determines that confidentiality is required, hearings may be held in
private.

At the conclusion of hearings and staff
investigations, the Committee issues a report containing its conclusions and recommendations
for presentation to the Legislature. While the recommendations made by the
Committee are not binding on the government of the day or on the corporation,
the Committee and its staff follow with interest the response to its proposals
and the actions taken.

The First Four Years

The first Committee on Crown Corporations
chose B. C. Hydro and Power Authority, the largest provincial Crown
corporation, as its first subject for review. Examination of several B.C. Hydro
activities took up a major part of the Committee's first year. Preliminary
inquiries were also made of the B.C. Housing Corporation (since dissolved) and
the Insurance Corporation of B.C..

The Committee began by reviewing Hydro's
urban transit services which were incurring losses exceeding 560 million
annually and consequently were requiring offsets from Hydro's electricity,
natural gas and railway operations. A report was filed with the Legislature in
May, 1978, questioning the desirability of leaving the service within Hydro
where it was in effect a "forgotten child". Two months later the
government created the Urban Transit Authority and Pacific Coach Lines Ltd.,
two new Crown corporations, to assume responsibility for urban transit services
and interurban bus services respectively.

The Committee also investigated alleged
contract irregularities during construction of B.C. Hydro dams on the Columbia
River. During May and June 1978, four public hearings were held with Hydro
management to examine the tendering process, contract award procedures and
management and financial controls employed during construction of three
Columbia River Treaty dams. This inquiry led to a comprehensive report
outlining the history of the project, documenting associated problem areas and
suggesting improvements to both contracting procedures and organization
structure at B.C. Hydro.

In September, 1979, the Committee completed
a review of the 1980-1989 electrical supply-demand forecasts prepared by B.C.
Hydro. The working papers coming from this review dealt primarily with three
questions: the accuracy of expected demand growth; the provision of electrical
power beyond the forecast horizon; and the implications of pre-building
generating facilities to allow increases in electricity exports to other
Canadian provinces or to the United States. The Committee went further on this
last topic by suggesting appropriate conditions for sale of surplus
electricity.

The B.C. Ferry Corporation, which provides
coastal ferry service to over 12 million passengers and 4 million vehicles
annually, was chosen by the Committee for review during 1979/80. Several public
hearings were held with management and directors, including the corporation
chairman, the Minister of Transportation and Highways. The Committee's
interests focused on the ability of the corporation to plan for and finance
service demands which have been growing at 10 percent per year. Other issues
such as the clarity of corporate goals and objectives, external reporting and
disclosure practices, and labour relations were also addressed in a report
filed with the Legislature in January, 1981.

During 1980, the Committee also began a
review o the B.C. Railway which provides passenger and freight rail services to
the central and northern interior of British Columbia. This corporation has in
recent years required substantial financial assistance from the public treasury
to maintain uneconomic services and to service an enormous debt which was
accumulated during its developmental stage. During 1981, the Committee will
continue its review of B.C. Rail and begin as well a review of the provincial
insurance corporation.

The Committee's Achievements

Although it has touched on the activities of
each corporation, it has taken longer than originally expected for the
Committee to complete a thorough review of all scheduled Crown corporations.
However, on the basis of the work completed to date, it is possible to make a
preliminary assessment of the Committee's effectiveness. There are perhaps
three basic achievements which can be identified and which give encouragement
for the future of this and subsequent Committees on Crown Corporations.

The first major achievement of the Committee
has been its ability to gain credibility with the Crown corporations. All Crown
corporations accepted the need for a public forum in which they could seek
support for their plans and in which the 'shareholder' could review management
performance a proxy for the private sector Annual Meeting. The Committee was,
however, viewed by some as simply another layer of politics and bureaucracy to
complicate their businesses. This early skepticism has, for the most part, been
proven unwarranted by the sensitivity shown by the Committee and its staff to
both the public policy and the proprietary roles which these corporations seek
to balance. This is not to say that politics has not entered into the operation
of the Committee but instead that the Committee members from both sides of the
House have given greater emphasis to the management of the taxpayers'
investment in Crown companies.

The acceptance of the Committee has led to
its second major achievement, the implementation of changes within the Crown
corporations in line with many of its suggestions and recommendations. The
scheduled Crown corporations have introduced change, in organization structure,
procedures and policy', in the priority given to corporate planning activities
and in their external reporting and public disclosure policies. These
indications of increased awareness by management of performance and its evaluation
are encouraging results of the Committee's work.

The third major achievement has been a
visible change in the relationship between the government and the Crown
corporations. In line with Committee recommendations, the government has
expanded the board of B.C. Hydro in size and diversity of experience, thereby
improving the! direction of the corporation. A new full time chairman,
recruited outside of government, has been appointed to the B.C. Ferry
Corporation's board to replace the Minister of Transportation and Highways who
now serves as an ordinary director. In addition, the government has begun to
fund from the public treasury certain uneconomic services and projects
undertaken by Crown corporations at government request. These government actions,
representing a formalizing of relations, reflect a marked change from the
situation in which Crown corporations were viewed more as government
departments than as separate legal entitles with their own responsible boards
of directors and management teams providing goods and services in the
provincial economy.

The changes outlined here may seem modest
and in time might have been adopted with or without the catalyst of the
Committee on Crown Corporations. How ever, they do represent real achievements
towards the Committee's overall objective of improving the chain of direction,
control and accountability of Crown Corporations in British Columbia.